Torex Gold unveils maiden reserve at Mexico mine

Open pit mining operations at Torex Gold’s El Limon-Guajes Mine in Guerrero State, Mexico. Source: Torex Gold Resources Inc.

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Torex Gold Resources Inc. [TXG-TSX; TORXF-OTC] on Thursday June 20 released a maiden reserve and resource for the El Limon Deep (ELD) Zone Underground deposit located in Guerrero State, Mexico.

The company said probable reserves now stand at 86,000 ounces (487,000 tonnes at 5.5 g/t gold, while total measured and indicated resources have been pegged at 141,000 ounces (797,000 tonne at 5.52 g/t gold). While considered small, the ELD reserve is expected to supplement open pit production in due course from Torex’s broader El Limon Guajes complex.

Torex shares advanced on the news, rising 0.94% or 13 cents to $14.03 on volume of 461,731. The shares are trading in a 52-week range of $7.52 and $18.21.

The El Limon Guajes complex is located on the Morelos property, a group of seven mineral claims, hosting four deposits, and located 200 km southwest of Mexico City.

The four deposits include El Limon (including El Limon Sur), Sub-Sill, Guajes, and Media Luna. Each has a resource estimate prepared in according with NI 43-101 standards of disclosure.

The El Limon-Guajes Mine (ELG) includes three open pits and an underground mine.

Access to the ELD Zone will be through existing Sub-Sill underground development and the company is planning to mine the deposit at a rate of 800 tonnes per day at an estimated cost of US$86.60/tonne. Total capital requirements are estimated at $13.5 million, of which $10.5 million is allocated for lateral and vertical development based on conventional mining method assumptions.

ELG started production in December 2015 and reached the commercial production stage in March 2016. Once in full production, the mine was expected to rank amongst the largest and lowest cost gold operations in the world, with expected life-of-mine (LOM) annual production of 370,000 ounces of gold at a LOM all-in-sustaining cost of US$616/oz.

Late last year, the company released a technical report which said a new life-of-mine plan is forecasting has increased average annual gold production to 430,000 ounces per year, from 2019 to 2023.

ELD will be a test case for Torex’s new Muckahi underground mining technology, which, if successful, would have the potential ability to reduce costs, lower the cut-off grade and increase reserves.

While operating the ELG Mine complex, Torex is carrying out work on the Media Luna deposit to support the development of this mineral resource. The current estimated Media Luna inferred mineral resource is 51 million tonnes at 2.0 g/t gold equivalent cut-off grade.

But with only 31% of the magnetic anomaly explored, a recently released technical report said it would be prudent to allow for additional tailings capacity to accommodate potential future expansions of the mineral resource and extension of the mine life over the longer term.

An updated preliminary economic assessment for Media Luna indicates an all-in-sustaining cost of $610/oz on a gold equivalent basis (converting copper to gold equivalent). The initial capital cost is estimated at $496 million.

The technical report includes a Media Luna design utilizing the Muckahi Mining System. Torex says the technology has the potential to increase the Media Luna Project net present value by $197 million.

“If proven, the Muckahi technology could be applicable to many other underground deposits,” the company has said.


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